POLITICAL uncertainty amid Vice President Sara Duterte’s impeachment trial could dampen investor confidence, delay economic reforms and keep pressure on the peso even as inflation eases, ING Economics said.
In a commentary, the research unit of the global financial giant said the country’s political developments had added another source of uncertainty for investors at a time when the Bangko Sentral ng Pilipinas (BSP) was still battling lingering inflation risks.
“At the same time, rising political uncertainty following the vice president’s impeachment are weighing on investor sentiment, potentially delaying reforms, slowing the growth recovery, and maintaining downward pressure on the peso,” ING said.
The currency closed at P61.587 to the dollar last Friday, strengthening by 3.3 centavos from a day earlier. It closed near its record low of P61.75:$1 last Tuesday, hitting P61.71, amid a renewal of hostilities between Iran and the United States.
The peso continues to face a weakening bias despite signs of slowing inflation and is expected to trade at P61.70:$1 over the next month, before strengthening slightly to P61.50 after three months and P61 over six-month and 12-month horizons.
June marked the second consecutive month of slower headline inflation, helped largely by a further correction in global oil prices that translated into lower domestic fuel costs.
Consumer price growth slowed to 6.4 percent from May’s 6.8 percent but remained well over the central bank’s 2.0- to 4.0-percent target. ING Economics cautioned that the moderation was insufficient for the BSP to conclude that inflation had been fully brought under control.
“We don’t believe the central bank has enough evidence yet to declare victory on inflation,” it said.
Underlying price pressures remain evident, the research unit said, pointing to recently approved wage increases and a pickup in core inflation, which excludes volatile food and energy prices.
Core inflation rose to 4.4 percent in June from 4.1 percent in the previous month. It was also higher than the 1.4 percent recorded in June 2025.
“These risks should keep policymakers focused on ensuring inflation expectations remain anchored,” ING Economics said.
The BSP is still expected to raise its benchmark rate by another 50 basis points this year, with policymakers unlikely to ease their inflation-fighting stance despite the recent slowdown.
The central bank’s policymaking Monetary Board has ordered two 25-basis point increases so far this year, which brought the key rate to 4.75 percent, to keep inflation expectations anchored and mitigate possible second-round effects.
Inflation is currently expected to remain above target until next year. The BSP has raised the projection for 2026 to 6.4 percent from 6.3 percent and that for next year to 4.5 percent from 4.3 percent.
ING’s peso outlook follows that from Fitch Group unit BMI, which last week said that the currency could fall to a fresh record low of P63:$1 this year.
In its latest currency forecast, BMI said the peso could trade between P61 and P63 to the dollar before ending the year slightly stronger at P61:$1.
“A renewed escalation in the US-Iran conflict, US dollar firmness and seasonal peak in import demand will weigh on the peso in the near term,” it said.
“That said, we expect the peso to strengthen slightly to P61.00/USD by end-2026 as global oil prices ease and remittance inflows strengthen.”
